1. Lars Osberg Economics Department Dalhousie University April 19, 2009 Poverty and Recessions: Nova Scotia's Vulnerable in Tough Times

2. The Poverty Rate in Nova Scotia & Canada rises & falls at the same time

3. Because unemployment rises and falls with the business cycle

4. In Nova Scotia, as elsewhere, unemployment drives poverty

5. But there has been a big change - Poverty is much deeper now in Nova Scotia

6. So what’s happening to unemployment?

8. And now that we need a safety net… OECD Economic Outlook March 2009 http://www.oecd.org/dataoecd/18/1/42443150.pdf 20062007200820092010 Canada - Unemployment6.3%6.0%6.1%8.8%10.5%

9. What’s there ?

10. UI/EI Replacement Rate – 38 years of decline The average of the gross unemployment benefit replacement rates for two earnings levels, three family situations Source: OECD, Tax-Benefit Models. http://www.oecd.org/document/3/0,3343,en_2649_34637_39617987_1_1_1_1,00.html ; The Canadian Labour Force Participation Rate Revisited: Cohort and Wealth Effects Take Hold Steven James, Tim Sargent, Russell Barnett and Claude Lavoie Working Paper 2007 ‐ 01, Finance Canada, Page 11

11. EI Replacement Rate: Relatively low by OECD standards

13. Only insurable earnings up to the MIE covered by the Employment Insurance REPORT OF THE CHIEF ACTUARY TO THE EMPLOYMENT INSURANCE COMMISSION ON THE EMPLOYMENT INSURANCE PREMIUM RATE AND MAXIMUM INSURABLE EARNINGS, 2009: 200720082009 Maximum EI insurable earnings $40,00041,10042,300 Proportion of claims at maximum42.9%43.5%44.2% Maximum weekly benefits $423435447 Average weekly benefits $ CANSIM, table 276-0016276-0016 318331 % of insurable earnings below MIE41.5%40.9%40.4% % of insurable earnings above MIE58.5%59.1%59.6% 2007 actual: 2008, 2009 estimated

14. The Big Problem – EI is much harder to get, especially since 1996

15. Responding to Need (a bit) EI Eligibility & Benefit Duration March 15 - April 11, 2009 EI Regular Benefits TorontoMontrealWindsorHalifax Unemployment Rate8.38.212.15.9 Number of Insured Hours Required to Qualify595 455760 Minimum Weeks Payable23 2919 Maximum Weeks Payable47 5041 Unemployed Persons February 2009267,80098,10038,70013,400

16. Social Assistance – low & falling ATIONAL COUNCIL OF WELFARE: WELFARE INCOMES 2005

17. Poverty is NOT inevitable How much of market income would it take to completely eliminate the poverty gap ? Canada – 1.7% Nova Scotia – 1.7% Halifax – 2.1% V25746680, v25746752, v25746914; Low income cut-offs after tax, 1992 base; Aggregate low income gap as a percentage of market income (Percent); All family units For people who do not have much, it does not take much to make a big difference in their lives. Canada’s total poverty gap – approximately equal to foregone revenue of 2% cut in HST/GST

18. Appendix G Page 81 Low Income in Canada: 2000-2006 Using the Market Basket Measure HRSDC. October 2008; Table 1, page 12 The Evolution of Poverty Measurement - with special reference to Canada Osberg (2007) Poverty Line for 2 adult 2 child family (boy 13, girl 9) $2006 Market Basket Method LICO IAT rural = 21,860 100-499K = 28,200 500K+ = 30,000 LIM after tax = 29,600

19. So where is the NDP? What Policies are proposed? Nova Scotia – Total buy-in to “Targeted Tax Cut” Politics “Conservative tax hike on electricity makes life more expensive for families” “NDP will invest in jobs for Nova Scotians by introducing a 10 per cent Nova Scotia manufacturing and processing tax credit” Balanced Budgets ? Tax-free Electric Energy Biggest benefits if you turn up thermostat, have huge house Bad for environment, equity and efficiency Tax credits have nil impact on job creation in a recession